Can Your Followers Invest Under 506(b)? The Substantive Relationship Test for Creators
A social media following isn't, on its own, a pre-existing, substantive relationship. Rule 506(b) bans general solicitation, so you can only offer a 506(b) deal to people you already know well enough to judge their finances and sophistication. For most creators, that excludes the bulk of their followers.
New to this? Start with our guide to how creators raise money from followers for real estate.
What "pre-existing" and "substantive" mean
A pre-existing relationship started before the offering, and a substantive one gives you enough information to judge a person's finances and sophistication.
Pre-existing means the relationship started before the offering did. You can't meet someone because of the deal and then count them as pre-existing. Substantive means you know enough about them to judge whether they're accredited or financially sophisticated. SEC staff said in 2015 that self-certification alone isn't enough, and the SEC's 2020 integration rule (Rule 152) asks whether the issuer had enough information to evaluate the person's finances and sophistication.
Followers vs. real relationships
Whether a person counts depends on what you actually know about them, as the examples below show.
| Situation | Likely counts? |
|---|---|
| Someone has watched your videos for a year | Probably not, if you know nothing about their finances |
| Someone replied to your newsletter and you had a call about their goals and investing experience | Possibly, if you kept notes |
| A past co-investor in one of your deals | Can count, if you know their finances and sophistication |
| A friend or coworker who knows you well and whose finances you know | Likely |
| A new follower who signed up for a webinar about the live deal | No, the offering has already started |
Who can invest under 506(b)
Unlimited accredited investors, plus up to 35 non-accredited investors in any 90-day period who are financially sophisticated, alone or with a purchaser representative. Non-accredited investors must receive extra disclosure, including financial statement information, which adds cost and legal work.
How a creator builds substantive relationships
You build one by learning a person's finances and experience in a real conversation before your offering starts.
- Qualify people before there's a deal. Invite followers who want to invest into a list and learn their goals, experience and accreditation status on a short call.
- Keep notes. Record what you learned and when.
- Don't mention the live deal until the person is qualified and your offering is ready.
- Separate education from the pitch. Teaching real estate is fine. Pitching a specific deal publicly is the problem.
- Don't turn it into a mass process. Qualifying thousands of followers through a form isn't the same as knowing them.
When 506(b) isn't the right fit
If your plan is to post about the deal on YouTube and send everyone to one link, you're advertising it. That needs 506(c), with every investor verified as accredited. See 506(c) for content creators.
Can you switch from 506(c) to 506(b)?
Only with care. Under Rule 152(a)(1) and SEC staff guidance from January 2026 (Securities Act Rules C&DI 148.01), people reached through a public 506(c) offering can join a later 506(b) offering only if you had a substantive relationship with them before the 506(b) offering began. Time alone doesn't make a relationship substantive, because the staff looks at its quality.
Who this isn't for
506(b) isn't for creators who want to pitch a live deal publicly. If your plan is to post about the deal and send followers to one link, you need 506(c).
How DoorRaise helps
DoorRaise is built for sponsors raising from friends and followers under 506(c), so you can share one link and verify each investor from the deal page. Our posting rules spell out what you can say.
DoorRaise is for apartment buildings with 5 or more units. Start your deal or see pricing.
Related guides
These guides cover the next questions most readers have.
- Rule 506(c) for Content Creators: How to Raise From Accredited Followers
- How Much Can a Creator Raise From Followers for a Real Estate Deal? A Funnel Walkthrough
- What Creators Can Say (and Can't) in Videos and Posts About a Real Estate Deal
FAQ
Do my followers count as a pre-existing substantive relationship?
Not by themselves. You need real knowledge of a person's finances and sophistication, gained before the offering started.
Can I email my newsletter list about a 506(b) deal?
Not if the list is a general audience. That would be general solicitation. You can contact people you have qualified.
How many non-accredited investors can I take?
Up to 35 in any 90-day period under 506(b), and each must be sophisticated.
Is 506(b) cheaper than 506(c)?
It can be, when everyone is accredited and self-certifies. But with non-accredited investors the disclosure requirements add cost.
Sources
- SEC, Rule 506(b)
- 17 CFR 230.502
- SEC Release 33-10884 (2020)
- SEC staff letter, Citizen VC (2015)
- SEC, general solicitation
- DoorRaise, pricing
This post is general information, not legal advice. Talk to a securities attorney before you choose an exemption. DoorRaise is not a broker-dealer, investment adviser or funding portal.